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Ciena (CIEN) reported 1st Quarter January 2018 earnings of $0.13 per share on revenue of $646.1 million. The consensus earnings estimate was $0.13 per share on revenue of $643.2 million. The Earnings Whisper number was $0.14 per share. Revenue grew 4.0% on a year-over-year basis.

The company said during its conference call it expects second quarter revenue of $710.0 million to $740.0 million. The current consensus revenue estimate is $722.9 million for the quarter ending April 30, 2018.

Ciena, a network strategy and
technology company, today announced unaudited financial results for its
fiscal first quarter ended January 31, 2018.

"We demonstrated a strong start toward achieving our long-term financial
goals with our fiscal first quarter results, including year-over-year
top-line growth, continued cash generation and a strengthening balance
sheet," said Gary B. Smith, president and CEO, Ciena. "We also are
confident in our ability to continue driving market share gains across
key geographies and customer segments by intersecting the industrys
demand drivers with leading innovation."

For the fiscal first quarter 2018, Ciena reported revenue of $646.1
million as compared to $621.5 million for the fiscal first quarter 2017.

Cienas fiscal first quarter 2018 GAAP results include a non-cash $476.9
million charge related to the enactment of the Tax Cuts and Jobs Act. As
a result, Cienas GAAP net loss for the fiscal first quarter 2018 was
$(473.4) million, or $(3.29) per diluted common share, which compares to
a GAAP net income of $3.9 million, or $0.03 per diluted common share,
for the fiscal first quarter 2017.

Cienas adjusted (non-GAAP) net income for the fiscal first quarter 2018
was $21.9 million, or $0.15 per diluted common share, which compares to
an adjusted (non-GAAP) net income of $24.6 million, or $0.17 per diluted
common share, for the fiscal first quarter 2017.

Share Repurchase Program

On December 7, 2017, Ciena announced that its Board of Directors had
authorized a program to repurchase up to $300 million of the Companys
common stock through the end of fiscal 2020. The Company commenced
repurchases late in the fiscal first quarter 2018, and through March 5,
2018, has repurchased approximately 874,000 shares of its common stock,
for an aggregate purchase price of $19.5 million at an average price
of $22.34 per share.

Fiscal First Quarter 2018 Performance Summary

The tables below (in millions, except percentage data) provide
comparisons of certain quarterly results to the prior year. Appendix A
and B set forth reconciliations between the GAAP and adjusted (non-GAAP)
measures contained in this release.

GAAP Results

Q1

Q1

Period

Change

FY 2018

FY 2017

Y-T-Y*

Revenue

$ 646.1

$ 621.5

4.0 %

Gross margin

42.1 %

44.1 %

(2.0 )%

Operating expense

$ 255.0

$ 254.7

0.1 %

Operating margin

2.6 %

3.1 %

(0.5 )%

Non-GAAP

Results

Q1

Q1

Period

Change

FY 2018

FY 2017

Y-T-Y*

Revenue

$ 646.1

$ 621.5

4.0 %

Adj. gross margin

42.6 %

44.9 %

(2.3 )%

Adj. operating expense

$ 234.4

$ 226.2

3.6 %

Adj. operating margin

6.3 %

8.5 %

(2.2 )%

Adj. EBITDA

$

61.8

$

69.9

(11.6 )%

* Denotes % change, or in the case of margin, absolute change

Revenue by Segment

Q1 FY 2018

Q1 FY 2017

Revenue

%**

Revenue

%**

Networking Platforms

Converged Packet Optical (1)

$

427.4

66.1

$

417.8

67.2

Packet Networking

68.6

10.6

72.2

11.6

Total Networking Platforms

496.0

76.7

490.0

78.8

Software and Software-Related Services

Software Platforms

29.6

4.6

17.0

2.7

Software-Related Services

23.9

3.7

22.3

3.6

Total Software and Software-Related Services

53.5

8.3

39.3

6.3

Global Services

Maintenance Support and Training

56.0

8.7

55.0

8.9

Installation and Deployment

30.0

4.7

27.9

4.5

Consulting and Network Design

10.6

1.6

9.3

1.5

Total Global Services

96.6

15.0

92.2

14.9

Total

$

646.1

100.0

$

621.5

100.0

1. As of the first fiscal quarter of 2018, sales of Optical

Transport products are reflected within the Converged Packet Optical

product line for all periods presented.

Additional Performance Metrics for Fiscal First Quarter 2018

Revenue by Geographic Region

Q1 FY 2018

Q1 FY 2017

Revenue

% **

Revenue

% **

North America

$ 402.9

62.4

$ 405.9

65.3

Europe, Middle East and Africa

97.8

15.1

91.5

14.7

Caribbean and Latin America

34.6

5.4

35.2

5.7

Asia Pacific

110.8

17.1

88.9

14.3

Total

$ 646.1

100.0

$ 621.5

100.0

** Denotes % of total revenue

•
U.S. customers contributed 59.3% of total revenue

•
Two customers each accounted for greater than 10% of revenue and in
aggregate represented 25% of total revenue

The first fiscal quarter 2018 provision for income taxes includes the
following significant non-cash charges related to the enactment of the
Tax Cuts and Jobs Act:

•
$431.3 million charge related to the remeasurement of U.S. net
deferred tax assets at the lower statutory rate under the Tax Cuts and
Jobs Act; and

•
$45.6 million charge related to a transition tax on accumulated
historical foreign earnings and its deemed repatriation to the U.S.

Ciena continues to evaluate the impact of the Tax Cuts and Jobs Act. At
this time, Ciena does not expect to pay substantial cash taxes for U.S.
federal income tax for the foreseeable future primarily due to its
deferred tax asset balance. As of January 31, 2018, Ciena has net
deferred tax assets of approximately $739.4 million, and consequently,
over the near term, Cienas cash taxes will continue to be primarily
related to the state taxes and tax expense of Cienas foreign
subsidiaries, which amounts have not historically been significant.
Cienas foreign and domestic income tax expense for the first quarter of
fiscal 2018 and 2017 expected to be paid using cash was $1.0 million and
$0.4 million, respectively.

Supplemental Materials and Live Web Broadcast of Unaudited Fiscal
First Quarter 2018 Results

Today, Tuesday, March 6, 2018, in conjunction with this announcement,
Ciena has posted to the Quarterly
Results page of the Investor Relations section of its website
supporting materials for its unaudited fiscal first quarter 2018
results, including prepared remarks from management and a related
investor presentation.

Cienas management will also host a discussion today with investors and
financial analysts that will include the Companys fiscal second quarter
outlook. The live audio web broadcast beginning at 8:30 a.m. Eastern
will be accessible via www.ciena.com.
An archived replay of the live broadcast will be available shortly
following its conclusion on the Investor
Relations page of Cienas website.

Notes to Investors

Forward-Looking Statements. You are encouraged to
review the Investors section of our website, where we routinely post
press releases, SEC filings, recent news, financial results,
supplemental financial information, and other announcements. From time
to time we exclusively post material information to this website along
with other disclosure channels that we use. This press release contains
certain forward-looking statements that involve risks and uncertainties.
These statements are based on current expectations, forecasts,
assumptions and other information available to the Company as of the
date hereof. Forward-looking statements include statements regarding
Cienas expectations, beliefs, intentions or strategies regarding the
future and can be identified by forward-looking words such as
"anticipate," "believe," "could," "estimate," "expect," "intend," "may,"
"should," "will," and "would" or similar words. Forward-looking
statements in this release include: "We demonstrated a strong start
toward achieving our long-term financial goals with our fiscal first
quarter results, including year-over-year top-line growth, continued
cash generation and a strengthening balance sheet"; "We also are
confident in our ability to continue driving market share gains across
key geographies and customer segments by intersecting the industrys
demand drivers with leading innovation".

Cienas actual results, performance or events may differ materially from
these forward-looking statements made or implied due to a number of
risks and uncertainties relating to Cienas business, including: the
effect of broader economic and market conditions on our customers and
their business; changes in network spending or network strategy by large
communication service providers; seasonality and the timing and size of
customer orders, including our ability to recognize revenue relating to
such sales; the level of competitive pressure we encounter; the product,
customer and geographic mix of sales within the period; supply chain
disruptions and the level of success relating to efforts to optimize
Cienas operations; changes in foreign currency exchange rates affecting
revenue and operating expense; the impact of the Tax Cuts and Jobs Act,
changes in estimates of prospective income tax rates and any adjustments
to Cienas provisional estimates whether related to further guidance,
analysis or otherwise, and the other risk factors disclosed in Cienas
Report on Form 10-K, which Ciena filed with the Securities and Exchange
Commission on December 22, 2017. Ciena assumes no obligation to update
any forward-looking information included in this press release.

Non-GAAP Presentation of Quarterly and Annual Results. This
release includes non-GAAP measures of Cienas gross profit, operating
expense, income from operations, earnings before interest, tax,
depreciation and amortization (EBITDA), Adjusted EBITDA, and measures of
net income and net income per share. In evaluating the operating
performance of Cienas business, management excludes certain charges and
credits that are required by GAAP. These items share one or more of the
following characteristics: they are unusual and Ciena does not expect
them to recur in the ordinary course of its business; they do not
involve the expenditure of cash; they are unrelated to the ongoing
operation of the business in the ordinary course; or their magnitude and
timing is largely outside of Cienas control. Management believes that
the non-GAAP measures below provide management and investors useful
information and meaningful insight to the operating performance of the
business. The presentation of these non-GAAP financial measures should
be considered in addition to Cienas GAAP results and these measures are
not intended to be a substitute for the financial information prepared
and presented in accordance with GAAP. Cienas non-GAAP measures and the
related adjustments may differ from non-GAAP measures used by other
companies and should only be used to evaluate Cienas results of
operations in conjunction with our corresponding GAAP results. To the
extent not previously disclosed in a prior Ciena financial results press
release, Appendix A and B to this press release set forth a complete
GAAP to non-GAAP reconciliation of the non-GAAP measures contained in
this release.

About Ciena. Ciena (CIEN) is a network strategy
and technology company. We translate best-in-class technology into value
through a high-touch, consultative business model - with a relentless
drive to create exceptional experiences measured by outcomes. For
updates on Ciena, follow us on Twitter @Ciena,
LinkedIn, the Ciena
Insights blog, or visit www.ciena.com.

CIENA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

Quarter Ended January 31,

2018

2017

Revenue:

Products

$

525,609

$ 506,993

Services

120,526

114,504

Total revenue

646,135

621,497

Cost of goods sold:

Products

313,120

286,811

Services

61,250

60,901

Total cost of goods sold

374,370

347,712

Gross profit

271,765

273,785

Operating expenses:

Research and development

118,524

116,869

Selling and marketing

88,515

85,002

General and administrative

38,406

35,864

Amortization of intangible assets

3,623

14,551

Significant asset impairments and restructuring costs

5,961

2,395

Total operating expenses

255,029

254,681

Income from operations

16,736

19,104

Interest and other income (loss), net

1,575

370

Interest expense

(13,734 )

(15,203 )

Income before income taxes

4,577

4,271

Provision for income taxes (1)

477,940

410

Net income (loss)

$ (473,363 )

$

3,861

Net Income (Loss) per Common Share

Basic net income (loss) per common share

$

(3.29 )

$

0.03

Diluted net income (loss) per potential common share

$

(3.29 )

$

0.03

Weighted average basic common shares outstanding

143,922

140,682

Weighted average dilutive potential common shares outstanding(2)

143,922

142,184

1. The provision for income taxes for the first quarter of fiscal

2018 is primarily related to the enactment of the Tax Cuts and Jobs

Act. These amounts are provisional and reflect managements current

estimates and current interpretations of the Tax Cuts and Jobs Act.

These amounts may require adjustment in future periods as additional

guidance under the Tax Cuts and Jobs Act becomes available and

analysis of its provisions is completed.

2. Weighted average dilutive potential common shares outstanding

used in calculating GAAP diluted net income per common share for the

first quarter of fiscal 2017 includes 1.5 million shares underlying

certain stock options and restricted stock units.

CIENA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

January 31,

October 31,

2018

2017

ASSETS

Current assets:

Cash and cash equivalents

$

648,867

$

640,513

Short-term investments

278,743

279,133

Accounts receivable, net

553,724

622,183

Inventories

255,251

267,143

Prepaid expenses and other

186,837

197,339

Total current assets

1,923,422

2,006,311

Long-term investments

59,151

49,783

Equipment, building, furniture and fixtures, net

318,835

308,465

Goodwill

267,899

267,458

Other intangible assets, net

96,485

100,997

Deferred tax asset, net

739,446

1,155,104

Other long-term assets

64,146

63,593

Total assets

$

3,469,384

$

3,951,711

LIABILITIES AND STOCKHOLDERS EQUITY

Current liabilities:

Accounts payable

$

209,243

$

260,098

Accrued liabilities and other short-term obligations

268,164

322,934

Deferred revenue

103,216

102,418

Current portion of long-term debt

352,753

352,293

Total current liabilities

933,376

1,037,743

Long-term deferred revenue

79,297

82,589

Other long-term obligations

115,970

111,349

Long-term debt, net

584,601

583,688

Total liabilities

$

1,713,244

$

1,815,369

Stockholders equity:

--

--

Preferred stock - par value $0.01; 20,000,000 shares authorized;

zero shares issued

and outstanding

Common stock - par value $0.01; 290,000,000 shares authorized;

1,442

1,430

144,180,782

and 143,043,227 shares issued and outstanding

Additional paid-in capital

6,828,648

6,810,182

Accumulated other comprehensive income (loss)

2,375

(11,017 )

Accumulated deficit

(5,076,325 )

(4,664,253 )

Total stockholders equity

1,756,140

2,136,342

Total liabilities and stockholders equity

$

3,469,384

$

3,951,711

CIENA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Three Months Ended January 31,

2018

2017

Cash flows provided by (used in) operating activities:

Net income (loss)

$ (473,363 )

$

3,861

Adjustments to reconcile net income (loss) to net cash provided by

(used in) operating activities:

Depreciation of equipment, building, furniture and fixtures, and

20,833

16,699

amortization of leasehold improvements

Share-based compensation costs

12,393

12,825

Amortization of intangible assets

5,912

18,864

Deferred taxes

476,897

--

Provision for inventory excess and obsolescence

6,804

5,431

Provision for warranty

4,657

553

Other

2,269

4,452

Changes in assets and liabilities:

Accounts receivable

72,439

(21,956 )

Inventories

5,199

(78,749 )

Prepaid expenses and other

16,120

(1,004 )

Accounts payable, accruals and other obligations

(111,476 )

4,037

Deferred revenue

(2,981 )

8,737

Net cash provided by (used in) operating activities

35,703

(26,250 )

Cash flows used in investing activities:

Payments for equipment, furniture, fixtures and intellectual property

(25,662 )

(25,706 )

Purchase of available for sale securities

(118,877 )

(89,897 )

Proceeds from maturities of available for sale securities

110,000

95,000

Settlement of foreign currency forward contracts, net

1,061

440

Net cash used in investing activities

(33,478 )

(20,163 )

Cash flows provided by (used in) financing activities:

Payment of long term debt

(1,000 )

(46,296 )

Payment of capital lease obligations

(914 )

(605 )

Repurchases of common stock-repurchase program

(4,103 )

--

Proceeds from issuance of common stock

11,008

9,708

Net cash provided by (used in) financing activities

4,991

(37,193 )

Effect of exchange rate changes on cash and cash equivalents

1,138

(156 )

Net increase (decrease) in cash and cash equivalents

8,354

(83,762 )

Cash and cash equivalents at beginning of period

640,513

777,615

Cash and cash equivalents at end of period

$

648,867

$

693,853

Supplemental disclosure of cash flow information

Cash paid during the period for interest

$

10,020

$

11,831

Cash paid during the period for income taxes, net

$

3,498

$

5,521

Non-cash investing activities

Purchase of equipment in accounts payable

$

2,014

$

5,293

Non-cash financing activities

Repurchase of common stock in accrued liabilities from repurchase

$

1,652

$ --

program

APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly

Measures (unaudited)

Quarter Ended January 31,

2018

2017

Gross Profit Reconciliation (GAAP/non-GAAP)

GAAP gross profit

$

271,765

$ 273,785

Share-based compensation-products

672

561

Share-based compensation-services

625

628

Amortization of intangible assets

2,289

4,313

Total adjustments related to gross profit

3,586

5,502

Adjusted (non-GAAP) gross profit

$

275,351

$ 279,287

Adjusted (non-GAAP) gross profit percentage

42.6 %

44.9 %

Operating Expense Reconciliation (GAAP/non-GAAP)

GAAP operating expense

$

255,029

$ 254,681

Share-based compensation-research and development

3,255

3,209

Share-based compensation-sales and marketing

3,328

2,873

Share-based compensation-general and administrative

4,474

5,453

Amortization of intangible assets

3,623

14,551

Significant asset impairments and restructuring costs

5,961

2,395

Total adjustments related to operating expense

20,641

28,481

Adjusted (non-GAAP) operating expense

$

234,388

$ 226,200

Income from Operations Reconciliation (GAAP/non-GAAP)

GAAP income from operations

$

16,736

$

19,104

Total adjustments related to gross profit

3,586

5,502

Total adjustments related to operating expense

20,641

28,481

Total adjustments related to income from operations

24,227

33,983

Adjusted (non-GAAP) income from operations

$

40,963

$

53,087

Adjusted (non-GAAP) operating margin percentage

6.3 %

8.5 %

Net Income (Loss) Reconciliation (GAAP/non-GAAP)

GAAP net income (loss)

$

(473,363 )

$

3,861

Exclude GAAP provision for income taxes

477,940

410

Income before income taxes

$

4,577

$

4,271

Total adjustments related to income from operations

24,227

33,983

Loss on extinguishment of debt

--

41

Non-cash interest expense

749

513

Adjusted income before income taxes

$

29,553

$

38,808

Non-GAAP tax provision on adjusted income before income taxes

7,645

14,165

Adjusted (non-GAAP) net income

$

21,908

$

24,643

Weighted average basic common shares outstanding

143,922

140,682

Weighted average dilutive potential common shares outstanding (1)

145,558

165,104

Net Income (Loss) per Common Share

GAAP diluted net income (loss) per common share

$

(3.29 )

$

0.03

Adjusted (non-GAAP) diluted net income per common share (2)

$

0.15

$

0.17

1.

Weighted average dilutive potential common shares outstanding used

in calculating Adjusted (non-GAAP) diluted net income per common

share for the first quarter of fiscal 2018 includes 0.9 million

shares underlying certain stock options and restricted stock units

and 0.7 million shares underlying Cienas "New" 3.75% convertible

senior notes, due October 15, 2018.

Weighted average dilutive potential common shares outstanding used

in calculating Adjusted (non-GAAP) diluted net income per common

share for the first quarter of fiscal 2017 includes 1.5 million

shares underlying certain stock options and restricted stock units,

5.6 million shares underlying Cienas 0.875% convertible senior

notes, which were paid at maturity during the third quarter of

fiscal 2017 and 17.4 million shares underlying Cienas "Original"

3.75% convertible senior notes, due October 15, 2018.

2.

The calculation of Adjusted (non-GAAP) diluted net income per common

share for the first quarter of fiscal 2017 requires adding back

interest expense of approximately $0.4 million associated with

Cienas 0.875% convertible senior notes, which were paid at maturity

during the third quarter of fiscal 2017 and approximately $2.3

million associated with Cienas "Original" 3.75% convertible senior

notes, due October 15, 2018 to the Adjusted (non-GAAP) net income in

order to derive the numerator for the Adjusted earnings per common

share calculation.

APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited)

Quarter Ended January 31,

2018

2017

Earnings Before Interest, Tax, Depreciation and Amortization

(EBITDA)

Net income (loss) (GAAP)

$ (473,363 )

$

3,861

Add: Interest expense

13,734

15,203

Less: Interest and other income (loss), net

1,575

370

Add: Provision for income taxes

477,940

410

Add: Depreciation of equipment, building, furniture and fixtures,

20,833

16,699

and amortization of leasehold improvements

Add: Amortization of intangible assets

5,912

18,864

EBITDA

$

43,481

$

54,667

Add: Shared-based compensation cost

12,393

12,825

Add: Significant asset impairments and restructuring costs

5,961

2,395

Adjusted EBITDA

$

61,835

$

69,887

The adjusted (non-GAAP) measures above and their reconciliation to
Cienas GAAP results for the periods presented reflect adjustments
relating to the following items:

•
Amortization of intangible assets - a non-cash expense arising
from the acquisition of intangible assets, principally developed
technologies and customer-related intangibles, that Ciena is required
to amortize over its expected useful life.

•
Significant asset impairments and restructuring costs - costs
incurred as a result of restructuring activities taken to align
resources with perceived market opportunities.

•
Non-cash loss on extinguishment of debt - related to certain
private repurchases conducted with several holders of Cienas 0.875%
convertible senior notes, which were paid at maturity during the third
quarter of fiscal 2017.

•
Non-cash interest expense - a non-cash debt discount expense
amortized as interest expense during the term of Cienas 4.0% senior
convertible notes due December 15, 2020 relating to the required
separate accounting of the equity component of these convertible notes.

•
Non-GAAP tax provision - consists of current and deferred
income tax expense commensurate with the level of adjusted income
before income taxes and utilizes a current, blended U.S. and foreign
statutory annual tax rate of 25.87% for the first fiscal quarter of
2018, and 36.5% for the first fiscal quarter of 2017. This rate may be
subject to change in the future, including as a result of changes in
tax policy or tax strategy. In calculating, the Non-GAAP tax provision
for the first fiscal quarter of 2018, Ciena excluded certain
significant non-cash charges resulting from the enactment of Tax Cuts
and Jobs Act. Specifically, during the first quarter of fiscal 2018,
Ciena recorded a provisional, non-cash charge of $476.9 million,
consisting of a $431.3 million charge related to the re-measurement of
net deferred tax assets at the lower statutory rate, and a $45.6
million charge related to the U.S. transition tax described above.
These amounts are provisional in nature based on Securities and
Exchange Commission Staff Accounting Bulletin No. 118 and therefore
subject to adjustment in future periods, including as a result of the
availability of additional guidance and further analysis by Ciena
under the Tax Cuts and Jobs Act.